Wednesday, November 12, 2008
Tuesday, November 11, 2008
Not So Easy on His Knees: Balancing Faith with Celebrity, Part I
Editor’s Note: Here, we continue to publish the work of Dr. Laurie Britt-Smith and her exploration of Bono’s rock-n-roll rhetoric. In this installment, she begins an exploration of the tension between faith and celebrity grounded in the concept of a Discourse community.
Previous articles:
Sunday, November 09, 2008
Obama’s Harmony of Intellect and Intuition
by Bono 11-07-2008
Mr. President, Barack,
Every room I have ever been in with you was a much easier room for your presence.
It’s rare to meet a person like you, where intellect and intuition make such a perfect rhyme.
Your intuition tells you that the well-being of the American people, spiritually as well as physically, is connected with America’s role in the world. I know you know that the prosperity of your fellow Americans, though hard fought, is less fulfilling knowing there is so much more that can be done to alleviate poverty and suffering in the developing world. You know that less than 1 percent of government income as a contribution from the world’s richest economy to the world’s poorest is not a fair tithe — even in times like these — which is why you have promised to double foreign assistance. As with our own personal sojourn, so it is with country and community -– we discover who we are in service to others.
I know your intellect — fashioned in the halls of Harvard and on the floor of the United States Senate — has weighed up the evidence on how effective American tax dollars are, when converted into smart, targeted, focused aid. Putting children into school where they can think freely of freedom. Giving farmers on the parched land seed varieties that double the size of their crop yields. Giving mothers 20 cent immunizations to protect their newborns from the deadly viruses that they pass on through childbirth. I know your intellect has taken in the data and seen the analysis on the transformative power of effective aid in places where the United States flag is currently not one smiled at. I know you know how much cheaper it is to make friends of potential enemies than to defend yourself at a later date. I know you know all this stuff.
My prayer for you is that your instinct and intellect stay in harmony in the difficult months and triumphant years ahead.
Friday, November 07, 2008
Thursday, November 06, 2008
What Sank McCain. Could anything have prevented this defeat?
In January, a few days before the South Carolina Democratic primary, I went to a Barack Obama rally in Columbia with a Republican friend who had never before seen Obama in action. This friend’s reaction: "Oh, s**t." The super-enthusiastic crowd was about 3,000 strong — no big deal compared to the audiences Obama would later draw in the general election, but several times what John McCain was attracting in South Carolina at the time. My friend said the scene reminded him of the old clip from Jaws, in which the small-town sheriff, seeing how big the shark really is, says, "We’re gonna need a bigger boat." The question, of course, was whether Republicans actually had a bigger boat.
Now we can say for sure that they didn’t.
In his concession speech, John McCain referred to his effort as "the most challenged campaign in modern times." He was right. What sank McCain’s presidential bid was a set of the worst conditions to face any candidate in decades, in combination with an opponent who was not only a better campaigner but also the favorite of the nation’s media establishment. And there was some luck involved, too.
Could any candidate have been elected to succeed a president of his own party whose job approval rating was 25 percent? Probably not. Could any candidate have been elected to continue his party’s stay in the White House when roughly 90 percent of Americans believed the country was on the wrong track? Probably not. Could any candidate from the governing party have been elected after the Dow Jones Industrial Average plunged 4,000 points before one could even turn around? Probably not.
McCain faced all those obstacles — and not just those, but a political climate in which his advantage over his opponent was perversely diminished by McCain’s own courage and good judgment. In the primaries, McCain bet his entire candidacy on the surge in Iraq. He was right, and Democrats were wrong. By any measure, he should have benefited, and Democrats should have suffered, when the surge worked. Instead, as Americans achieved greater success in Iraq — and as U.S. deaths fell to 13 last month, equaling the lowest total in a very long time — the war in Iraq simply fell off many voters’ radar screens. McCain’s resoluteness and good sense went largely unrewarded.
And yet in spite of it all, McCain still managed to outperform conditions. The vote totals, as of 2 a.m. Eastern Time, show McCain with about 47 percent of the national popular vote. Perhaps that figure will go down a bit, but there’s no doubt that McCain far outshone George H.W. Bush’s 1992 re-election effort — a campaign undertaken in poor conditions for a Republican, but not nearly as bad as what McCain encountered this time — in which Bush won just 38 percent of the vote. Likewise, McCain outperformed Bob Dole, who won a little less than 41 percent in 1996. And McCain’s percentage of the popular vote might be not too far from George W. Bush’s in 2000, when Bush lost the popular vote but won the Electoral College.
In other words, McCain faced tougher challenges than his predecessors, yet somehow managed to win more votes. Just not enough.
You hear a lot of talk to the effect that, despite all the obstacles facing his campaign, McCain was actually even, and a little ahead, of Obama until the financial crisis blew everything up. There’s some truth to that; on September 8, according to the RealClearPolitics average of polls, McCain led Obama 48.3 percent to 45.4 percent. As late as September 17, the two candidates were tied at 45.7 percent each.
But that relatively brief moment at the top of the polls didn’t mean that all McCain’s other problems had gone away, or been conquered. Instead, it meant that any new problem, whether it be one as cataclysmic as the financial breakdown or one far less serious, would be placed on top of all of other McCain’s other handicaps, making the wall facing McCain a little higher.
A few weeks before the election, a top McCain aide gave me the campaign’s inside view of the situation. "You could think of this as trying to summit a mountain," he said. "Both campaigns have to summit the mountain. In most elections, one campaign has some kind of advantage over the other — maybe they get a ten-minute or a half-hour head start — but both sides have to climb the same face of the mountain. In this election, we’re not climbing the same face of the mountain. They’re climbing the side of the mountain with boardwalks and latte stands and playgrounds for the kids, and we’re climbing the side of the mountain with axes and ice picks and one slip and you’re dead."
It wasn’t easy, and it wasn’t fair, but that’s the way things go. And in the end, McCain slipped.
Now we can say for sure that they didn’t.
In his concession speech, John McCain referred to his effort as "the most challenged campaign in modern times." He was right. What sank McCain’s presidential bid was a set of the worst conditions to face any candidate in decades, in combination with an opponent who was not only a better campaigner but also the favorite of the nation’s media establishment. And there was some luck involved, too.
Could any candidate have been elected to succeed a president of his own party whose job approval rating was 25 percent? Probably not. Could any candidate have been elected to continue his party’s stay in the White House when roughly 90 percent of Americans believed the country was on the wrong track? Probably not. Could any candidate from the governing party have been elected after the Dow Jones Industrial Average plunged 4,000 points before one could even turn around? Probably not.
McCain faced all those obstacles — and not just those, but a political climate in which his advantage over his opponent was perversely diminished by McCain’s own courage and good judgment. In the primaries, McCain bet his entire candidacy on the surge in Iraq. He was right, and Democrats were wrong. By any measure, he should have benefited, and Democrats should have suffered, when the surge worked. Instead, as Americans achieved greater success in Iraq — and as U.S. deaths fell to 13 last month, equaling the lowest total in a very long time — the war in Iraq simply fell off many voters’ radar screens. McCain’s resoluteness and good sense went largely unrewarded.
And yet in spite of it all, McCain still managed to outperform conditions. The vote totals, as of 2 a.m. Eastern Time, show McCain with about 47 percent of the national popular vote. Perhaps that figure will go down a bit, but there’s no doubt that McCain far outshone George H.W. Bush’s 1992 re-election effort — a campaign undertaken in poor conditions for a Republican, but not nearly as bad as what McCain encountered this time — in which Bush won just 38 percent of the vote. Likewise, McCain outperformed Bob Dole, who won a little less than 41 percent in 1996. And McCain’s percentage of the popular vote might be not too far from George W. Bush’s in 2000, when Bush lost the popular vote but won the Electoral College.
In other words, McCain faced tougher challenges than his predecessors, yet somehow managed to win more votes. Just not enough.
You hear a lot of talk to the effect that, despite all the obstacles facing his campaign, McCain was actually even, and a little ahead, of Obama until the financial crisis blew everything up. There’s some truth to that; on September 8, according to the RealClearPolitics average of polls, McCain led Obama 48.3 percent to 45.4 percent. As late as September 17, the two candidates were tied at 45.7 percent each.
But that relatively brief moment at the top of the polls didn’t mean that all McCain’s other problems had gone away, or been conquered. Instead, it meant that any new problem, whether it be one as cataclysmic as the financial breakdown or one far less serious, would be placed on top of all of other McCain’s other handicaps, making the wall facing McCain a little higher.
A few weeks before the election, a top McCain aide gave me the campaign’s inside view of the situation. "You could think of this as trying to summit a mountain," he said. "Both campaigns have to summit the mountain. In most elections, one campaign has some kind of advantage over the other — maybe they get a ten-minute or a half-hour head start — but both sides have to climb the same face of the mountain. In this election, we’re not climbing the same face of the mountain. They’re climbing the side of the mountain with boardwalks and latte stands and playgrounds for the kids, and we’re climbing the side of the mountain with axes and ice picks and one slip and you’re dead."
It wasn’t easy, and it wasn’t fair, but that’s the way things go. And in the end, McCain slipped.
Wednesday, November 05, 2008
Re: Benchmarks
While Obama's victory was impressive, given that we may have had the largest turnout (as a percentage) in nearly 100 years, I was surprised that Obama did not win more soundly. If you put aside the popular vote, 17 presidential elections have seen larger electoral college victories than Obama since 1912 (by my count) and only 7 have had smaller electoral victories. Included among the larger victories (at least, for now) are Clinton in 1992 and Reagan in 1980 — both unseating incumbent presidents. His popular vote percentage victory is also smaller than Clinton, most recently, in 1996.
Second, Obama’s "coattails" were shorter than anticipated, but the strength of the Democrats was undeniable among key groups. If you look at preliminary exit polling, I would argue there are five crucial factors for both the House and the presidency in this election:
1. The youth vote: It was marginally more important this year; and 18-29 year olds are solidly Democratic. This is a major branding problem for the Republican Party. I think millenials, in general, have a lot of conservative tendencies. They believe in the private sector. They aren't cynical. They believe in the family, community, service, and social responsibility; but I think that Republicans are losing them based largely on outreach and perceived problems with tolerance and diversity.
2. Minority votes: There are scary trends in this election. Obama won 96% of the African-American vote (the Dems weren't far behind) and more than two-thirds of the Hispanic vote, concentrated largely among younger Hispanic voters. Perception matters, and I think it's important for the Republicans to make an effort to talk to these groups. I fundamentally believe our ideas about free markets, individual liberty, etc. could be enormously appealing to these folks, but we aren't seeking to engage these broad communities as much as we should.
3. The economy: Of the 42% of exit poll respondents who listed their economic condition as "worse" in recent years, the Dems won 70% in House races. The Republicans won those who responded as "same" or "better". We have to tackle the financial crisis and come up with a compelling (and true) narrative for the events.
4. Punishment: The nation was tired of President Bush. It would have been almost impossible for the incumbent party to win, in my opinion, in the midst of a financial crisis and two wars. The generic Democrat was polling 9% of the generic Republican before the election. Obama won by a smaller margin.
5. The Obama/Dean machine: We’re getting beat on the ground, on campus, and in new technologies. Republicans should get as many smart 20-30 year olds in a room as possible ASAP and figure out how to mobilize people to spread Republican enthusiasm and use new technology (twitter, Facebook, text messaging, social networking, etc.) to do it. We also have to find a way to raise money and hit all 50 states.
Given the above factors, I'm surprised Republicans didn't lose by more. I also think this is a forward-looking challenge for the party not just a result of Obama's charisma (which is considerable). However, there is hope. Even in the midst of this crisis, our beating was moderate, and I think that the younger generation and various minority groups would be receptive to conservative arguments if we were to engage them and reclaim our optimism and confidence in our ideas (while modifying our positions on a few key issues).
Obama win =Largest percentage stock drop in day-after election history
The following table shows the percentage rise or decline in the
Dow Jones industrial average .DJI, Standard & Poor's 500 index
.SPX and Nasdaq composite index .IXIC on the day after a U.S
presidential election and who won the Election Day vote.
Year Dow S&P Nasdaq President elect
2008 -5.05 -5.27 -5.53 Barack Obama
2004 +1.01 +1.12 +0.98 George W. Bush
2000 -0.41 -1.58 -5.39 No decision: G.W. Bush v Al Gore*
1996 +1.59 +1.46 +1.34 William Clinton
1992 -0.91 -0.67 +0.16 William Clinton
1988 -0.43 -0.66 -0.29 George H. W. Bush
1984 -0.88 -0.73 -0.32 Ronald Reagan
1980 +1.70 +1.77 +1.49 Ronald Reagan
1976 -0.99 -1.14 -1.12 James Carter
1972 -0.11 -0.55 -0.39 Richard Nixon
1968 +0.34 +0.16 --- Richard Nixon
1964 -0.19 -0.05 --- Lyndon Johnson
1960 +0.77 +0.44 --- John Kennedy
1956 -0.85 -1.03 --- Dwight Eisenhower
1952 +0.40 +0.28 --- Dwight Eisenhower
1948 -3.85 -4.15 --- Harry Truman
1944 -0.27 0.00 --- Franklin Roosevelt
1940 -2.39 -3.14 --- Franklin Roosevelt
1936 +2.26 +1.40 --- Franklin Roosevelt
1932 -4.51 -2.67 --- Franklin Roosevelt
1928 +1.20 +1.77 --- Herbert Hoover
1924 +1.17 --- --- Calvin Coolidge
1920 -0.57 --- --- Warren Harding
1916 -0.35 --- --- Woodrow Wilson
1912 +1.83 --- --- Woodrow Wilson
1908 +2.38 --- --- William Taft
1904 +1.30 --- --- Theodore Roosevelt
1900 +3.33 --- --- William McKinley
1896 +4.54 --- --- William McKinley
* George W. Bush ultimately was determined the winner of the 2000
election.
Source: Reuters EcoWin
No Tight Little Circles
In the colonial era, ministers used to preach what were called artillery sermons—messages leading up to elections in order to teach and inform the saints on their duties in the civil realm. The message today is an artillery sermon to prepare you for the election, and for what comes after, regardless of what that is.
But this exhortation is a bit more focused on the process of voting itself. First, all that we do is to be offered to God at the fundamental. Ask God to count your vote, and it does not matter who else does. Give what you do to Jesus, and let Him do with it what He wills. You should be like the small boy who surrendered his fish and bread for Jesus to multiply, and not like someone who tried to feed the multitude himself by giving everyone a crumb.
Secondly, confirm it in your heart and soul that the day after the election, God is still on His throne, and Jesus is still at His right hand. Certain things are not on the ballot, as the sovereignty of God is not. When Christians react to elections with despair and panic, they are demonstrated that their faith is in the wrong place. If the election goes badly, do not soak your hair with lighter fluid, set it off, and then run in tight, little circles. Be a Christian. If the election goes well, do not act you have just been saved. Salvation is not something that Caesar holds in his hand, whether to give or withhold.
Third, vote with a clear mind and clean heart, doing so confidently and with boldness. Stand up for the unborn. Strike at every idol. Love God, and hate sin. Stand against every throne built on a foundation of lawlessness. And return here next Lord’s Day for the real work of Reformation.
President-Elect Obama
A man of mixed race has now reached the pinnacle of U.S. power only two generations since the end of Jim Crow. This is a tribute to American opportunity, and it is something that has never happened in another Western democracy -- notwithstanding European condescension about "racist" America. That blacks voted for Mr. Obama so heavily is a typical rite of American passage, and it is similar to the kind of cultural pride that Catholics took in the victory of John Kennedy in 1960.
While Mr. Obama lost among white voters, as most modern Democrats do, his success is due in part to the fact that he also muted any politics of racial grievance. We have had in recent years two black Secretaries of State, black CEOs of our largest corporations, black Governors and Generals -- and now we will have a President. One promise of his victory is that perhaps we can put to rest the myth of racism as a barrier to achievement in this splendid country. Mr. Obama has a special obligation to help do so.
Tuesday, November 04, 2008
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Weighing the 'Bono Rule'- Says Bono, 'I Genuinely Blew It'
Getty ImagesBono in 2003 after his band, U2, won an award and he uttered the fateful word at issue in the Supreme Court.
Monday, November 03, 2008
Bush Praised By Both Parties for Transition Planning
Bush is engineering what may be the most carefully considered and potentially successful presidential transition in modern times, both Democrats and Republicans close to the process say.
The president started the preparations last spring, ordering federal agencies to get ready for a new administration, with deadlines for various tasks. By August, White House Chief of Staff Joshua Bolten had persuaded representatives of Republican John McCain and Democrat Barack Obama to join in. The advance work may get the new president off to a fast start, participants say.
Sunday, November 02, 2008
Five things that keep Democrats up at night
WASHINGTON–An extra hour on the clock? Just another hour for Democrats to toss and turn.
On this, their most nervous of weekends – with thoughts of Fat Ladies not yet singing, Yogi Berra proclaiming: "It ain't over till it's over" and Dewey beating Truman – they received another fright yesterday from Barack Obama's aunt living illegally in Boston.
Here are five things that come at Obama supporters in the night:
• Auntie Zeituni: The Obama campaign said yesterday it would return $260 in campaign donations from Zeituni Onyango, his Kenyan-born aunt who is living illegally in this country.
Obama said he had no idea the woman he refers affectionately to as "Auntie Zeituni" in his memoir had been ordered out of the country four years ago by an immigration judge but said he believed all U.S. laws should be followed.
She lives in public housing in Boston and attended Obama's swearing-in as a U.S. senator in 2004 and, according to Obama, last talked to him about two years ago.
The campaign said such revelations about the half-sister of Obama's late father should be viewed suspiciously when they're leaked less than 72 hours before voting day. Not quite a November surprise but certainly an unwelcome November distraction.
• Pennsylvania, Ohio and Florida: All are still in the Obama column, but all are tightening in the final days.
"It's time for a reality check," Pennsylvania Democratic Governor Ed Rendell said Friday. "We've got our work cut out for us."
His state looks solidly behind Obama, but what's with this NBC/Mason Dixon poll suddenly showing his lead at only four points, within the margin of error?
RealClearPolitics, which collects and averages major polls, shows McCain has whittled six points off Obama's once 14-point lead in Pennsylvania in three weeks.
That's 68 electoral votes in those three states. If everything goes south this weekend. ... Want to sleep better? John McCain's home state in Arizona is now in the toss-up category, according to RealClearPolitics.
• Investor's Business Daily poll: It has become the Republican equivalent of comfort food, the most accurate poll in 2004 has consistently put the national race closer than most other polls do.
Yesterday, it had Obama up only 4.5 points nationally, but with 8.7 per cent still saying they were unsure. And while Democrats are worrying, what about this nugget in yesterday's Hotline Diageo tracking poll putting McCain and Obama tied among independent voters? A week ago, Obama led by five points.
Maybe running mate Joe Biden will make you feel better.
"I felt awful good about this time in the (John) Kerry campaign and I felt good in the(Al) Gore campaign and so, so, this, that old joke, you know, it ain't over till it's over," Biden said.
Never mind.
• Where is the youth vote? There is evidence that in the midst of record early voting, the one missing component is the youth vote, those who have turned out in the tens of thousands to cheer Obama at rallies.
In Florida, where 3.4 million people have already voted, an Orlando Sentinel study found only 15 per cent of them were under age 35.
Then there is the legendary Republican Get Out the Vote effort. But this year, some of the GOTV money has been poured into final weekend advertising and it is hard to believe a legendary Obama ground game would not deliver.
Right, kids?
• The Bradley Effect: This phenomenon – named after black candidate Tom Bradley, who unexpectedly lost to the 1982 California gubernatorial election to the white Republican challenger, George Deukmejian, may be myth or at least outdated.
There is no reputable polling data available in 2008 that indicates voters are telling pollsters they will vote for Obama while actually planning to vote for McCain.
More often than not, Obama outperformed his polling numbers in the primaries.
But it would be naïve to discount race in places like Pennsylvania and Ohio, states where Hillary Clinton easily beat Obama in the primaries, and it is more likely that many people who tell pollsters they are undecided have really decided to vote for McCain.
That means there could be 6 per cent of Americans listed as "undecided" who are actually McCain backers hiding their intentions.
But an expected record black vote for Obama will overwhelm any latent racist effect.
Won't it?Speculators, Politicians, and Financial Disasters
Fueled by easy credit, the real-estate market had been rising swiftly for some years. Members of Congress were determined to assure the continuation of that easy credit. Suddenly, the party came to a devastating halt. Defaults multiplied, banks began to fail. Soon the economic troubles spread beyond real estate. Depression stalked the land.
The year was 1836.
The nexus of excess speculation, political mischief, and financial disaster—the same tangle that led to our present economic crisis—has been long and deep. Its nature has changed over the years as Americans have endeavored, with varying success, to learn from the mistakes of the past. But it has always been there, and the commonalities from era to era are stark and stunning. Given the recurrence of these themes over the course of three centuries, there is every reason to believe that similar calamities will beset the system as long as human nature and human action play a role in the workings of markets.
_____________
Let us begin our account of the catastrophic effects of speculative bubbles and political gamesmanship with the collapse of 1836. Thanks to a growing population, prosperity, and the advancing frontier, poorly regulated state banks had been multiplying throughout the 1830’s. In those days, chartered banks issued paper money, called banknotes, backed by their reserves. From 1828 to 1836, the amount in circulation had tripled, from $48 million to $149 million. Bank loans, meanwhile, had almost quadrupled to $525 million. Many of the loans went to finance speculation in real estate.
Much of this easy-credit-induced speculation had been caused, as it happens, by President Andrew Jackson. This was a terrific irony, since Jackson, who served as President from 1829 until 1837, hated speculation, paper money, and banks. His crusade to destroy the Second Bank of the United States, an obsession that led him to withdraw all federal funds from its coffers in 1833, removed the primary source of bank discipline in the United States. Jackson had transferred those federal funds to state banks, thereby enabling their outstanding loans to swell.
The real-estate component of the crisis began to take shape in 1832, when sales by the government of land on the frontier were running about $2.5 million a year. Some of the buyers were prospective settlers, but most were speculators hoping to turn a profit by borrowing most of the money needed and waiting for swiftly-rising values to put them in the black. By 1836, annual land sales totaled $25 million; in the summer of that year, they were running at the astonishing rate of $5 million a month.
While Jackson, who was not economically sophisticated, did not grasp how his own actions had fueled the speculation, he understood perfectly well what was happening. With characteristic if ill-advised decisiveness, he moved to stop it. Since members both of Congress and of his cabinet were personally involved in the speculation, he faced fierce opposition. But in July, as soon as Congress adjourned for the year, Jackson issued an executive order known as the “specie circular.” This forbade the Land Office to accept anything but gold and silver (i.e., specie) in payment for land. Jackson hoped that the move would dampen the speculation, and it did. Unfortunately, it did far more: people began to exchange their banknotes for gold and silver. As the demand for specie soared, the banks called in loans in order to stay liquid.
The result was a credit crunch. Interest rates that had been at 7 percent a year rose to 2 and even 3 percent a month. Weaker, overextended banks began to fail. Bankruptcies spread. Even several state governments found they could not roll over their debts, forcing them into default. By April 1837, a month after Jackson left the presidency, the great New York diarist Philip Hone noted that “the immense fortunes which we heard so much about in the days of speculation have melted like the snows before an April sun.”
The longest depression in American history had set in. Recovery would not begin until 1843. In Charles Dickens’s A Christmas Carol, published that same year, Ebenezer Scrooge worries that a note payable to him in three days might be as worthless as “a mere United States security.”
_____________
Modern standards preclude government officials and members of Congress from the sort of speculation that was rife in the 1830’s. But today’s affinities between Congressmen and lobbyists, affinities fueled by the largess of political-action committees, have produced many of the same consequences.
Consider the savings-and-loan (S&L) debacle of the 1980’s. The crisis, which erupted only two decades ago but seems all but forgotten, was almost entirely the result of a failure of government to regulate effectively. And that was by design. Members of Congress put the protection of their political friends ahead of the interests of the financial system as a whole.
After the disaster of the Great Depression, three types of banks still survived—artifacts of the Democratic party’s Jacksonian antipathy to powerful banks. Commercial banks offered depositors both checking and savings accounts, and made mostly commercial loans. Savings banks offered only savings accounts and specialized in commercial real-estate loans. Savings-and-loan associations (“thrifts”) also offered only savings accounts; their loan portfolios were almost entirely in mortgages for single-family homes.
All this amounted, in effect, to a federally mandated cartel, coddling those already in the banking business and allowing very few new entrants. Between 1945 and 1965, the number of S&L’s remained nearly constant at about 8,000, even as their assets grew more than tenfold from almost $9 billion to over $110 billion. This had something to do with the fact that the rate of interest paid on savings accounts was set by federal law at .25 percent higher than that paid by commercial banks, in order to compensate for the inability of savings banks and S&L’s to offer checking accounts. Savings banks and S&L’s were often called “3-6-3” institutions because they paid 3 percent on deposits, charged 6 percent on loans, and management hit the golf course at 3:00 p.m. on the dot.
These small banks were very well connected. As Democratic Senator David Pryor of Arkansas once explained:
You got to remember that each community has a savings-and-loan; some have two; some have four, and each of them has seven or eight board members. They own the Chevy dealership and the shoe store. And when we saw these people, we said, gosh, these are the people who are building the homes for people, these are the people who represent a dream that has worked in this country.
They were also, of course, the sorts of people whose support politicians most wanted to have—people who donated campaign money and had significant political influence in their localities.
The banking situation remained stable in the two decades after World War II as the Federal Reserve was able to keep interest rates steady and inflation low. But when Lyndon Johnson tried to fund both guns (the Vietnam war) and butter (the Great Society), the cartel began to break down.
If the government’s first priority had been the integrity of the banking system and the safety of deposits, the weakest banks would have been forced to merge with larger, sounder institutions. Most solvent savings banks and S&L’s would then have been transmuted into commercial banks, which were required to have larger amounts of capital and reserves. And some did transmute themselves on their own. But by 1980 there were still well over 4,500 S&L’s in operation, relics of an earlier time.
_____________
Why was the integrity of the banking system not the first priority? Part of the reason lay in the highly fragmented nature of the federal regulatory bureaucracy. A host of agencies—including the Comptroller of the Currency, the Federal Reserve, the FDIC and the FSLIC, state banking authorities, and the Federal Home Loan Bank Board (FHLBB)—oversaw the various forms of banks. Each of these agencies was more dedicated to protecting its own turf than to protecting the banking system as a whole.
Adding to the turmoil was the inflation that took off in the late 1960’s. When the low interest rates that banks were permitted to pay failed to keep pace with inflation, depositors started to look elsewhere for a higher return. Many turned to money-market funds, which were regulated by the Securities and Exchange Commission rather than by the various banking authorities and were not restricted in the rate of interest they could pay. Money began to flow out of savings accounts and into these new funds, in a process known to banking specialists by the sonorous term “disintermediation.”
By 1980, with inflation roaring above 12 percent—the highest in the country’s peacetime history—the banks were bleeding deposits at a prodigious rate. The commercial banks could cope; their deposit base was mostly in checking accounts, which paid no interest, and their lending portfolios were largely made up of short-term loans whose average interest rates could be quickly adjusted, not long-term mortgages at fixed interest. But to the savings banks and S&L’s, disintermediation was a mortal threat.
Rather than taking the political heat and forcing the consolidation of the banking industry into fewer, stronger, and more diversified banks, Washington rushed to the aid of the ailing S&L’s with quick fixes that virtually guaranteed future disaster. First, Congress eliminated the interest-rate caps. Banks could now pay depositors whatever rates they chose. While it was at it, Congress also raised the amount of insurance on deposits, from $40,000 to $100,000 per depositor.
At the same time, the Federal Home Loan Bank Board changed the rules on brokered deposits. Since the 1960’s, brokers had been making, on behalf of their customers, multiple deposits equal to the limit on insurance. This allowed wealthy customers to possess insured bank deposits of any cumulative size—an end-run around the limit that should never have been tolerated in the first place. Realizing that these deposits were “hot money,” likely to chase the highest return, the Home Loan board forbade banks to have more than five percent of their deposit base in such instruments. But in 1980 it eliminated the restriction.
With no limits on interest rates that could be paid and no risk of loss to the customers, the regulators and Congress had created an economic oxymoron: a high-yield, no-risk security. As money flowed in to take advantage of the situation, the various S&L’s competed among themselves to offer higher and higher interest rates. Meanwhile, however, their loan portfolios were still in long-term home mortgages, many yielding low interest.
As a result, they went broke. In 1980 the S&L’s had a collective net worth slightly over $32 billion. By December 1982 that number had shrunk to less than $4 billion.
To remedy the disaster caused by the quick fixes of 1980, more quick fixes were instituted. The FHLBB lowered reserve requirements—the amount of money that banks must keep in highly liquid form, like Treasury notes, in order to meet any demand for withdrawals—from 5 to 3 percent of deposits. “With the proverbial stroke of the pen,” the journalist L.J. Davis wrote, “sick thrifts were instantly returned to a state of ruddy health, while thrifts that only a moment before had been among the dead who walk were now reclassified as merely enfeebled.”
For good measure, the Bank Board changed its accounting rules, allowing the thrifts to show handsome profits when they were, in fact, going bust. It was a case of regulators authorizing the banks they regulated to cook the books. Far worse, the rule that only locals could own an S&L was eliminated. Now anyone could buy a thrift. High-rollers began to move in, delighted to be able to assume the honorific title of “banker.”
And Congress, ever anxious to help the Chevy dealers and shoe-store owners, lifted the limits on what the thrifts themselves could invest in. No longer were they limited to low-interest, long-term, single-family mortgages. Now they could lend up to 70 percent of their portfolios for commercial real-estate ventures and consumer needs. In short, Congress gave the S&L’s permission to become full-service banks without requiring them to hold the capital and reserves of full-service banks.
Now came the turn of state-chartered thrifts, whose managers understandably wanted to enjoy the same freedoms enjoyed by federally-chartered S&L’s. State governments from Albany to Sacramento were obliging. California, which had the largest number of state-chartered S&L’s, allowed them to invest in anything from junk bonds to start-up software companies—in effect, to become venture-capital firms using government-guaranteed money. The consequence, as predictable as the next solar eclipse, was a collapse of the S&L’s en masse. Between 1985 and 1995, over a thousand were shut down by the government or forced to merge. The cost to the public is estimated to have run $160 billion.
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As the sorry tale of the S&L crisis suggests, the road to financial hell is sometimes paved with good intentions. There was nothing malign in attempting to keep these institutions solvent and profitable; they were of long standing, and it seemed a noble exercise to preserve them. Perhaps even more noble, and with consequences that have already proved much more threatening, was the philosophy that would eventually lead the United States into its latest financial crisis—a crisis that begins, and ends, with mortgages.
A mortgage used to stay on the books of the issuing bank until it was paid off, often twenty or thirty years later. This greatly limited the number of mortgages a bank could initiate. In 1938, as part of the New Deal, the federal government established the Federal National Mortgage Association, nicknamed Fannie Mae, to help provide liquidity to the mortgage market.
Fannie Mae purchased mortgages from initiating banks and either held them in its own portfolio or packaged them as mortgage-backed securities to sell to investors. By taking these mortgages off the books of the issuing banks, Fannie Mae allowed the latter to issue new mortgages. Being a government entity and thus backed by the full faith and credit of the United States, it was able to borrow at substantially lower interest rates, earning the money to finance its operations on the difference between the money it borrowed and the interest earned on the mortgages it held.
Together with the GI Bill of 1944, which guaranteed the mortgages issued to veterans, Fannie Mae proved a great success. The number of Americans owning their own homes climbed steadily, from fewer than 15 percent of non-farm families in the 1930’s to nearly 70 percent by the 1980’s. Thus did Fannie Mae and the GI Bill prove to be powerful engines for increasing the size of the middle class.
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It can be argued that 70 percent is about as high a proportion as could, or should, be hoped for in home ownership. Many young people are not ready to buy a home; many old people prefer to rent. Some families move so frequently that home ownership makes no sense. Some people, like Congressman Charlie Rangel of New York, take advantage of local rent-control laws to obtain housing well below market rates, and therefore have no incentive to buy.
And some families simply lack the creditworthiness needed for a bank to be willing to lend them money, even on the security of real property. Perhaps their credit histories are too erratic; perhaps their incomes and net worth are lower than bank standards; or perhaps they lack the means to make a substantial down payment, which by reducing the amount of the mortgage can protect a bank from a downturn in the real-estate market.
But historically there was also a class, made up mostly of American blacks, for whom home ownership was out of reach. Although simple racial prejudice had long been a factor here, it was, ironically, the New Deal that institutionalized discrimination against blacks seeking mortgages. In 1935 the Federal Housing Administration (FHA), established in 1934 to insure home mortgages, asked the Home Owner’s Loan Corporation—another New Deal agency, this one created to help prevent foreclosures—to draw up maps of residential areas according to the risk of lending in them. Affluent suburbs were outlined in blue, less desirable areas in yellow, and the least desirable in red.
The FHA used the maps to decide whether or not to insure a mortgage, which in turn caused banks to avoid the redlined neighborhoods. These tended to be in the inner city and to comprise largely black populations. As most blacks at this time were unable to buy in white neighborhoods, the effect of redlining was largely to exclude even affluent blacks from the mortgage market.
Even after the end of Jim Crow in the 1960’s, the effect of redlining lingered, perhaps more out of habit than of racial prejudice. In 1977, responding to political pressure to abolish the practice, Congress finally passed the Community Reinvestment Act, requiring banks to offer credit throughout their marketing areas and rating them on their compliance. This effectively outlawed redlining.
Then, in 1995, regulations adopted by the Clinton administration took the Community Reinvestment Act to a new level. Instead of forbidding banks to discriminate against blacks and black neighborhoods, the new regulations positively forced banks to seek out such customers and areas. Without saying so, the revised law established quotas for loans to specific neighborhoods, specific income classes, and specific races. It also encouraged community groups to monitor compliance and allowed them to receive fees for marketing loans to target groups.
But the aggressive pursuit of an end to redlining also required the active participation of Fannie Mae, and thereby hangs a tale. Back in 1968, the Johnson administration had decided to “adjust” the federal books by taking Fannie Mae off the budget and establishing it as a “Government Sponsored Enterprise” (GSE). But while it was theoretically now an independent corporation, Fannie Mae did not have to adhere to the same rules regarding capitalization and oversight that bound most financial institutions. And in 1970 still another GSE was created, the Federal Home Loan Mortgage Corporation, or Freddie Mac, to expand further the secondary market in mortgage-backed securities.
This represented a huge moral hazard. The two institutions were supposedly independent of the government and owned by their stockholders. But it was widely assumed that there was an implicit government guarantee of both Fannie and Freddie’s solvency and of the vast amounts of mortgage-based securities they issued. This assumption was by no means unreasonable. Fannie and Freddie were known to enjoy lower capitalization requirements than other financial institutions and to be held to a much less demanding regulatory regime. If the United States government had no worries about potential failure, why should the market?
Forward again to the Clinton changes in 1995. As part of them, Fannie and Freddie were now permitted to invest up to 40 times their capital in mortgages; banks, by contrast, were limited to only ten times their capital. Put briefly, in order to increase the number of mortgages Fannie and Freddie could underwrite, the federal government allowed them to become grossly undercapitalized—that is, grossly to reduce their one source of insurance against failure. The risk of a mammoth failure was then greatly augmented by the sheer number of mortgages given out in the country.
That was bad enough; then came politics to make it much worse. Fannie and Freddie quickly evolved into two of the largest financial institutions on the planet, with assets and liabilities in the trillions. But unlike other large, profit-seeking financial institutions, they were headquartered in Washington, D.C., and were political to their fingertips. Their management and boards tended to come from the political world, not the business world. And some were corrupt: the management of Fannie Mae manipulated the books in order to trigger executive bonuses worth tens of millions of dollars, and Freddie Mac was found in 2003 to have understated earnings by almost $5 billion.
Both companies, moreover, made generous political contributions, especially to those members of Congress who sat on oversight committees. Their charitable foundations could be counted on to kick in to causes that Congressmen and Senators deemed worthy. Many of the political contributions were illegal: in 2006, Freddie was fined $3.8 million—a record amount—for improper election activity.
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By 2007, Fannie and Freddie owned about half of the $12 trillion in outstanding mortgages, an unprecedented concentration of debt—and of risk. Much of the debt was concentrated in the class of sub-prime mortgages that had proliferated after the 1995 regulations. These were mortgages given to people of questionable credit standing, in one of the attempts by the federal government to increase home ownership among the less well-to-do.
Since banks knew they could offload these sub-prime mortgages to Fannie and Freddie, they had no reason to be careful about issuing them. As for the firms that bought the mortgage-based securities issued by Fannie and Freddie, they thought they could rely on the government’s implicit guarantee. AIG, the world’s largest insurance firm, was happy to insure vast quantities of these securities against default; it must have seemed like insuring against the sun rising in the West.
Wall Street, politicians, and the press all acted as though one of the iron laws of economics, as unrepealable as Newton’s law of universal gravity, had been set aside. That law, simply put, is that potential reward always equals potential risk. In the real world, unfortunately, a high-yield, no-risk investment cannot exist.
In 2006, after an astonishing and unsustainable climb in home values, the inevitable correction set in. By mid-2007, many sub-prime mortgages were backed by real estate that was now of lesser value than the amount of debt. As the market started to doubt the soundness of these mortgages, their value and even their salability began to deteriorate. So did the securities backed by them. Companies that had heavily invested in sub-prime mortgages saw their stock prices and their net worth erode sharply. This caused other companies to avoid lending them money. Credit markets began to tighten sharply as greed in the marketplace was replaced by fear.
A vicious downward spiral ensued. Bear Stearns, the smallest investment bank on Wall Street, was forced into a merger in March with JPMorgan Chase, with guarantees from the Federal Reserve. Fannie and Freddie were taken over by the government in early September; Merrill Lynch sold itself to Bank of America; AIG had to be bailed out by the government to the tune of $85 billion; Lehman Brothers filed for bankruptcy; Washington Mutual became the biggest bank failure in American history and was taken over by JPMorgan Chase; to avoid failure, Wachovia, the sixth largest bank in the country, was taken over by Wells Fargo. The most creditworthy institutions saw interest rates climb to unprecedented levels—even for overnight loans of bank reserves, which are the foundation of the high-functioning capitalist system of the West. Finally it became clear that only a systemic intervention by the government would stem the growing panic and allow credit markets to begin to function normally again.
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Many people, especially liberal politicians, have blamed the disaster on the deregulation of the last 30 years. But they do so in order to avoid the blame’s falling where it should—squarely on their own shoulders. For the same politicians now loudly proclaiming that deregulation caused the problem are the ones who fought tooth and nail to prevent increased regulation of Fannie and Freddie—the source of so much political money, their mother’s milk.
To be sure, there is more than enough blame to go around. Forgetting the lessons of the past, Wall Street acted as though the only direction that markets and prices could move was up. Credit agencies like Moody’s, Standard & Poor’s, and Fitch gave high ratings to securities that, in retrospect, they clearly did not understand. The news media did not even try to investigate the often complex economics behind the housing market.
But remaining at the heart of the financial beast now abroad in the world are Fannie Mae and Freddie Mac and the mortgages they bought and turned into securities. Protected by their political patrons, they were allowed to pile up colossal debt on an inadequate capital base and to escape much of the regulatory oversight and rules to which other financial institutions are subject. Had they been treated as the potential risks to financial stability they were from the beginning, the housing bubble could not have grown so large and the pain that is now accompanying its end would not have hurt so much.
Herbert Hoover famously remarked that “the trouble with capitalism is capitalists. They’re too greedy.” That is true. But another and equal trouble with capitalism is politicians. Like the rest of us, they are made of all-too-human clay and can be easily blinded to reality by naked self-interest, at a cost we are only now beginning to fathom.
Footnotes
About the Author
John Steele Gordon is the author of, among other books, An Empire of Wealth: The Epic Story of American Economic Power (2004). His “Look Who’s Afraid of Free Trade” appeared in the February COMMENTARY.
Liberals and the Surge
In early January 2007, 71 percent of Americans said the Iraq war was going moderately badly to very badly. Indeed, the war had been unpopular for much of the previous years, at times deeply so. But by this past September, a nationwide Pew survey found “a striking rise in public optimism about the situation in Iraq.” According to the poll, 58 percent of Americans now believe the war in Iraq is going well or very well, and the same percentage now also say that the U.S. will definitely or probably succeed in Iraq.
This news is encouraging—and not terribly surprising. After all, most Americans have assessed the situation in Iraq based on a reasonable interpretation of events on the ground. And since the January 2007 announcement of the “surge”—President Bush’s decision to deploy 30,000 additional troops to Iraq, armed with a fundamentally new counterinsurgency strategy—the situation on the ground has, by every conceivable measure, improved. In some cases, the progress has been stunning.
And yet, no matter what most American believe or what reality tells us is so, leading liberal observers and politicians, long in the vanguard of opposition to the war, have denounced the surge at every point. Even as some, in the face of overwhelming evidence, have been forced to concede a modicum of American progress, they have done so reluctantly and have downplayed the role played by administration policy in achieving that progress. Others have denied that significant progress has been made at all.
Why they have responded in this way is a question worth exploring. But first it may be useful to establish the record.
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The formal inauguration of the surge in January 2007—in announcing it, the President said it would “change America’s course in Iraq, and help us succeed in the fight against terror”—was met by liberal commentators with a skepticism bordering on derision.
Eugene Robinson of the Washington Post mocked Bush’s “fantasy-based escalation . . . which could only make sense in some parallel universe where pigs fly and fish commute on bicycles.” At Time, Joe Klein ridiculed “Bush’s futile pipe dream.” Jonathan Chait, writing in the Los Angeles Times, found “something genuinely bizarre” about those Americans who actually supported the new strategy. “It is not just that they are wrong. . . . It’s that they are completely detached from reality.” The New Republic’s Peter Beinart predicted that, by 2008, American soldiers would “still be dying, and the catastrophe will still be deepening.” In sending more troops to Baghdad, Beinart wrote, “Bush is showing his commitment to win—except that the United States has already lost.”
Liberal politicians were just as certain that the surge was a doomed and irresponsible policy. On the night of the announcement, Senator Barack Obama proclaimed: “I am not persuaded that 20,000 additional troops in Iraq are going to solve the sectarian violence there. In fact, I think it will do the reverse.” Later in the month, Senator Joseph Biden declared: “If he surges another 20, 30 [thousand], or whatever number he’s going to, into Baghdad, it’ll be a tragic mistake.” Senator Hillary Clinton similarly insisted that “I cannot support [the] proposed escalation of the war in Iraq,” while Senator John Kerry said that sending in additional troops was not an “answer” but “a tragic mistake.”
Throughout the spring, even though the full complement of additional troops had yet to arrive in Iraq, the drumbeat of opposition continued, and so did intimations of American defeat. To Richard Cohen of the Washington Post, “the [American] lives lost in Iraq were wasted.” Former Ambassador Peter Galbraith, writing in the New York Review of Books, argued that Bush had embraced a plan that “has no chance of actually working. At this late stage, 21,500 additional troops cannot make a difference.” On Capitol Hill, Senator Christopher Dodd asserted that “there is no military solution in Iraq. To insist upon a surge is wrong.” Senate majority leader Harry Reid declared that “this surge is not accomplishing anything” and in April announced flatly that the Iraq war was “lost.”
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Two months later, liberal critics of the war remained of the same mind, and were now demanding that we quit the field altogether. According to a July 8 New York Times editorial, the time had come “for the United States to leave Iraq, without any more delay than the Pentagon needs to organize an orderly exit.” (This, despite the paper’s acknowledgment in the same editorial that an American pullout was likely to yield “further ethnic cleansing, even genocide,” not to mention regional chaos and more terrorism.) James Fallows of the Atlantic, a sharp critic of the surge from the outset, wrote that the expectations “being heaped” on it were “simply laughable.”
In August, Michael Ignatieff, formerly of Harvard and now deputy leader of Canada’s Liberal party, took to the pages of the New York Times Magazine with a mea culpa titled “Getting Iraq Wrong: What the War Has Taught Me About Political Judgment.” Ignatieff wrote:
The unfolding catastrophe in Iraq has condemned the political judgment of a President. But it has also condemned the judgment of many others, myself included, who as commentators supported the [2003] invasion. Many of us believed, as an Iraqi exile friend told me the night the war started, that it was the only chance the members of his generation would have to live in freedom in their own country. How distant a dream that now seems.
In fact, however, far from having turned into an “unfolding catastrophe,” the dream was already getting closer to realization. By the summer of 2007, although Iraq was still in many ways a broken nation, evidence was mounting that the surge was working. In almost no time, sectarian violence had been sharply decreased in Baghdad, and the provinces of Anbar and Diyala were being reclaimed. Coalition forces were making huge headway in human intelligence, and Al Qaeda in Iraq (AQI) was on the run.
In September, a full report on the situation was delivered by David Petraeus, the military architect of the surge and the new commanding general in Iraq, and Ryan Crocker, the U.S. ambassador to Iraq. Both men had traveled to Washington to provide two days of congressional testimony.
Petraeus and Crocker reported that civilian Iraqi deaths in all categories had declined by more than 45 percent since the height of sectarian violence the previous December. During the same period, the number of overall ethno-sectarian deaths had decreased by more than half in the country as a whole, and by about 70 percent in Baghdad. In Anbar province, thanks in large part to the turn against AQI by local Anbaris, car bombings and suicide attacks had declined in each of the previous five months. Likewise, the number of areas in which AQI enjoyed sanctuary had been considerably reduced. Even the political front showed advances, with heartening early signs of a bottom-up reconciliation of hitherto warring Iraqi factions.
While both Petraeus and Crocker were careful not to overstate the degree of progress in Iraq, and reminded everyone who would listen that the country remained a fragile place, they left no doubt of their belief that, in the words of Crocker, “a secure, stable, democratic Iraq at peace with its neighbors is attainable.”
But none of this mattered to the administration’s liberal critics, who to their earlier prognosis of failure were now adding charges of government cooking of the evidence. Even before the Petraeus-Crocker testimony, Senator Dick Durbin, the Democratic majority whip, warned Americans that “by carefully manipulating the statistics, the Bush-Petraeus report will try to persuade us that violence in Iraq is decreasing and thus the surge is working.” After the hearing, Representative Edward Markey of Massachusetts said the general’s testimony was “just a façade to hide from view the continuing failure of the Bush administration’s strategy.” To Representative Rahm Emanuel, the general’s written report deserved to win “the Nobel Prize for creative statistics or the Pulitzer for fiction.”
Paul Krugman, an influential columnist for the New York Times, could not have agreed more. The administration, he flatly asserted, was intentionally misleading the public by “creating the perception that the ‘surge’ is succeeding, even though there’s not a shred of verifiable evidence to suggest that it is.” Others were even more reckless. A Democratic Senator complained to the website Politico that no one was willing to call Petraeus “a liar on national TV,” hoping instead that “outside groups will do this for us.” As if in response, MoveOn.org, the left-wing political-action committee, promptly took out a full-page ad in the New York Times proposing, in giant type, a new name for General Petraeus: “General Betray Us.”
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In November 2007, two months after Petraeus and Crocker testified, Barack Obama was still arguing that the surge was having the opposite effect from the one they had described: “not only have we not seen improvements, but we’re actually worsening, potentially, a situation there.” Representative David Obey, asked if the surge strategy was working, offered the novel view that if violence was in fact decreasing, it might be because the insurgents were “running out of people to kill.”
True, such palterings were becoming a little harder to sustain. The Washington Post, for one, was ready to conclude in a mid-November editorial that “the ‘surge’ of U.S. military forces in Iraq this year has been, in purely military terms, a remarkable success.” And not only in military terms: “Markets in Baghdad are reopening, and the curfew is being eased; the huge refugee flow out of the country has begun to reverse itself.” By the end of 2007, there was no question that Iraq, which a year earlier had been on the brink of implosion, was now on the mend. Attacks against citizens in Baghdad had dropped by almost 80 percent since November 2006, murders in Baghdad province had decreased by 90 percent, and roadside bombings had declined by approximately 70 percent. In the Dura market in southern Baghdad, where fewer than a handful of shops had been open in January 2007 there were now 500 in operation. As Joseph Fil, commanding general of the multinational division in Baghdad, reported, “many Iraqis now can shop without fearing for their lives.”
Nevertheless, in a January 2008 debate, the leading contenders for the Democratic nomination—Obama, Clinton, and John Edwards—still refused to reassess their stance on the surge. Instead, they silently dropped the subject in favor of re-emphasizing their commitment to withdraw all combat troops from Iraq and their unchanged opposition to the presence of any permanent bases there.
Others were not quite so ready to abandon their conviction that the surge itself had failed, even if that meant moving the goalposts on the definition of success. In February, House Speaker Nancy Pelosi, questioned on her unbending insistence that American troops must begin an immediate and massive withdrawal from Iraq, was asked by the CNN correspondent Wolf Blitzer: “Are you not worried that all the gains that have been achieved over the past year might be lost?” Pelosi replied: “There haven’t been gains, Wolf. The gains have not produced the desired effect, which is the reconciliation of Iraq. This is a failure. This is a failure.” In the Washington Post, the writer Michael Kinsley rang an inventive change on the same motif: the surge was a failure, he reasoned, because even though violence was down, and even though political progress was being made, the number of American troops was still roughly where it was when the surge was announced—as if the achievements produced by those troops were somehow disconnected from their presence.
In early April of this year, Petraeus and Crocker made a return appearance on Capitol Hill. By then, some liberal politicians were reluctantly conceding security gains, but insisted they were evanescent and therefore unimportant—“very nice to have,” in the words of Senator Sheldon Whitehouse of Rhode Island, “but essentially . . . meaningless.” To the columnist E.J. Dionne, Jr., the problem now was that “the administration and its supporters talk incessantly about winning but offer no strategy for victory.” In doing so, he continued, they “resemble their own parody of liberal do-gooders insisting on continuing flawed and foolish programs no matter how obvious it becomes that their efforts are doing more harm than good.”
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More harm than good? In his April testimony, while stipulating that “the situation in certain areas is still unsatisfactory and innumerable challenges remain,” Petraeus presented an avalanche of statistics illustrating the degree to which “security in Iraq is better than it was when Ambassador Crocker and I reported to you last September, and . . . significantly better than it was 15 months ago when Iraq was on the brink of civil war and the decision was made to deploy additional U.S. forces to Iraq.” To which Crocker added:
Last September, I said that the cumulative trajectory of political, economic, and diplomatic developments in Iraq was upward, although the slope of that line was not steep. Developments over the last seven months have strengthened my sense of a positive trend.
Which did not stop Barack Obama from taking to the op-ed page of the New York Times two months later to insist that “the same factors that led me to oppose the surge still hold true.” A week later, ABC’s Terry Moran asked Obama if, knowing what he knew now, would he support it? Obama’s answer was “No.” That is, he was still against the surge despite his own belated acknowledgment that it had, in fact, “succeeded beyond our wildest dreams.” In the effort to reconcile this blatant contradiction—akin to a diagnostician’s continuing to oppose the treatment that made the patient well—he twisted himself into an intellectual pretzel, asserting that the decrease in violence was the result not of any new American strategy but of “political factors inside Iraq that came right at the same time.” A similar counterfactual claim would later be made by Bob Woodward in his new book The War Within and by Peter Galbraith in the New York Review. In Galbraith’s summary judgment, “less violence . . . is not the same thing as success,” and in any case the surge “has not been the main reason for the decline in violence.”
And so it goes. By the time General Petraeus handed over the flag of his command to General Raymond Odierno in September, the situation in Iraq had been utterly transformed. Not only had overall violence in Iraq declined to almost “normal” levels,* and not only were Iraqi security forces growing in numbers and effectiveness as threats from al-Qaeda and Shiite militias decreased, but Iraq’s political leaders had also reached comprehensive domestic accommodations, passing key laws in the areas of provincial elections, the distribution of resources, amnesty, pensions, investment, and de-Baathification. Also in September, Iraq’s parliament passed a crucial election law that, according to a story in the New York Times, “represents a significant achievement for a country that has more often resorted to violence than political negotiation in resolving its differences.”
Petraeus once described Iraq as “hard but not hopeless.” Today, he says Iraq is “hard but hopeful.” That statement would seem beyond dispute.
Not, however, to the war’s liberal critics.
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Those critics, in the piercing phrase of Senator Joseph Lieberman, “hear no progress in Iraq, see no progress in Iraq, and most of all, speak of no progress in Iraq.” So hermetically sealed off from reality are they that even Charles Peters, the founder of the liberal Washington Monthly, was driven to write as long ago as last December:
I have been troubled by the reluctance of my fellow liberals to acknowledge the progress made in Iraq in the last six months, a reluctance I am embarrassed to admit that I have shared. . . . [T]he fact is that the situation in Iraq, though some violence persists, is much improved since the summer. Why do liberals not want to face this fact, let alone ponder its implications?
Why, indeed? And, if reluctant in December 2007, why are most still reluctant today?
A generous interpretation is that by the end of 2006, many liberals had made a definitive good-faith judgment that the Iraq war was irretrievably lost. This then became the filter through which they viewed all later developments. Once convinced of the impossibility of substantial progress, never mind a decent outcome or an actual victory, they could not help receiving good news as anomalous and/or inherently unsustainable.
But the generous interpretation may be too generous, and also condescending. Reasonable and responsible adults are expected to assess the solidity of their convictions against the available evidence and in light of changing circumstances. Even at the time of the surge’s announcement, when things were going quite badly, should responsible adults not have been able to entertain the possibility that, given the enormity of what was at stake in the war, a fundamentally new approach merited at least a degree of support, however hesitant or conditional?
Instead, many pronounced the new approach a failure even before it was tried. Still worse was that they continued to pronounce it a failure even as the evidence began to amass that it was succeeding. Even those few who (like Richard Cohen and Joe Klein) eventually admitted they were wrong about the surge itself continued to insist they were right about the war. Others stuck more and more zealously to their original position the more it became falsified by reality. They, and not the President, were the ones who were truly “doubling down” on their bet—as if a decent outcome in Iraq threatened their entire worldview.
Nor was their blindness limited to the good news occurring in the lives of Iraqis. They seemed no less blind to the huge drop in American combat deaths. Those deaths, after all, had been said to be among the core concerns of the anti-surge critics, who along with their allies in the media had been focusing relentless attention on the numbers of American casualties in Iraq. Yet little was now made of the fact that—to take just one example—there were but five U.S. combat deaths in Iraq in July 2008. (The previous monthly low had been eight in May 2003, after the invasion.)
Nor, finally, has much if anything been made of the fact that coalition forces have drawn down significantly. All five of the U.S. combat brigades committed to the surge, as well as two Marine battalions and the Marine Expeditionary Unit, have withdrawn. One could not ask for a clearer sign that the surge has been achieving one of the key declared objectives of the anti-war critics themselves—namely, a reduction of American combat troops in Iraq. It is a sign that remains, for the critics, all but unnoticed.
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Enter, ignominiously, politics. For some liberals, hatred of the President was clearly so all-encompassing that they had developed a deep investment in the failure of what they habitually dismissed not as America’s war but as “Bush’s war.” To an extent, this passion was driven by merely partisan considerations: Iraq had become a superbly effective instrument with which to bludgeon Republicans. It had helped the Democrats take control of both the House and the Senate in 2006; might not a thorough “Republican” defeat in Iraq lastingly reshape the political landscape in their favor?
This is, admittedly, an unpleasant line of speculation, and those foolhardy enough to venture upon it have been loudly condemned for questioning the patriotism of their political adversaries. But patriotism is not the issue—judgment is. When politicians acting in good faith misjudge a situation, nothing prevents them from acknowledging their error and explaining themselves. For the most part, we await such acknowledgments in vain.
In partial extenuation, it might be contended that politicians have an elementary obligation to be responsive to the opinions of their constituents; since Iraq had become a certifiably unpopular cause, stepping out of line on the issue was likely to be regarded as an offense punishable at the polls. But what, then, are we to say of the opinion shapers, the editorial writers of our great newspapers, the essayists and columnists and book authors who, unconstrained by petty interest, present themselves as stalwartly independent spirits willing to follow the truth wherever it may lead? What was at work in them when the evidence of American progress—which started as a trickle, and then became a river, and eventually became a flood—could no longer be denied? For not only did they continue to deny it, but they actively promoted an alternative policy of withdrawal and retreat that would have made an American defeat, and a jihadist and Iranian victory, inevitable. Is it not fair to say that what was at work in them was an ideological antipathy not just to an American President, but to America’s cause?
Fortunately, as I noted at the outset, Americans at large are not so ready to deny the evidence of their senses, and appear open to reasoned argument on the basis of that evidence. For a political leader in high office, this is a great blessing. Some eyes will refuse to open and some ears will refuse to hear and some voices will always be raised high in derision. To act rightly in such circumstances is difficult and often enormously costly; but it is the very essence of leadership. If a leader’s decision is wise, there are grounds for hoping that in time this wisdom will be vindicated and, perhaps, recognized—even in the case of a war once massively unpopular but now winnable.
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Liberals and the Surge
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Footnotes
* According to the quarterly report submitted to Congress by the Department of Defense in September, “security incidents” in Iraq are at levels not seen since early 2004. Across Iraq, civilian deaths have declined by 77 percent since the same period in 2007, and ethno-sectarian-related deaths by 96 percent. Eleven of Iraq’s eighteen provinces are now under local Iraqi control.
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